PAYE for employers: registering, paying and deadlines

PAYE, short for Pay As You Earn, is the system that makes you deduct Income Tax and National Insurance from your employees’ pay and send it to HMRC. You do the sums on each payday and report what you paid and deducted, and HMRC collects the money on a monthly cycle.

On top of what you deduct from staff, you usually pay employer’s National Insurance at 15% on earnings above £96 a week, £417 a month or £5,000 a year for 2026 to 2027. The £242 weekly threshold applies to employee contributions instead. Different employer thresholds apply to some categories, including under-21s and eligible apprentices, so check HMRC’s rates table or your payroll provider before you budget.

You must register as an employer with HMRC if you start employing staff, and GOV.UK says that includes registering even if you are only employing yourself, for example as the only director of a limited company.

The same registration also applies if you use subcontractors for construction work, because you then run the Construction Industry Scheme as a contractor. The registration gives you an employer PAYE reference number, which HMRC sends by letter.

Before you take on an employee, work out what they will cost. Pay is only part of it: National Minimum Wage, National Insurance, sick pay, pension contributions and maternity or paternity pay all feed into the budget.

You register before the first payday, and not more than two months before you start paying staff. GOV.UK states that you must register before the first payday to get your employer PAYE reference number.

Limited companies with one to nine directors can register online. Other business types follow the route GOV.UK gives for them. Leave time for the reference number to arrive by post, because you need it to run payroll.

Before the first payday you also need to:

• Get each employee’s personal details and their P45, so you can work out their tax code.
• Use HMRC’s starter checklist if there is no P45.
• Tell HMRC about the new employee on or before their first payday.

On or before every payday you record the pay, calculate the deductions, work out your employer’s National Insurance, produce payslips and report it all to HMRC. You do this with payroll software, and GOV.UK describes the steps as follows.

• Record each employee’s pay, including salary or wages and any other pay.
• Calculate deductions such as tax and National Insurance.
• Work out the employer’s National Insurance you need to pay.
• Produce a payslip for each employee.
• Report pay and deductions to HMRC in a Full Payment Submission (FPS) on or before payday.

The FPS should include everyone you pay, even if they earn less than £96 a week. It goes in on or before payday even if you pay HMRC quarterly rather than monthly. Do not report too early, because you must send a corrected FPS if details change. If you spot a mistake, send a corrected FPS as soon as possible.

You pay what you owe by the 22nd of the month, or the 19th if you pay by post. The tax month runs from the 6th of one month to the 5th of the next, so each payment settles the tax month that has just ended.

Build the 22nd into your cash-flow forecast alongside other deadlines. Our guides to paying a VAT bill and paying Corporation Tax cover the dates for those taxes.

Some can. GOV.UK says that if you usually pay less than £1,500 per month, you may be able to pay quarterly instead of monthly, and you contact HMRC’s payment helpline to find out.

Quarterly payment changes only when the money is due. You still report every payday with an FPS. A quarterly bill is larger, so set money aside each month rather than treating the gap as spare cash.

HMRC charges interest daily at the standard rate on a late payment and may charge a penalty if you do not pay on time or in full. GOV.UK says HMRC will usually tell you if it thinks you have paid late, either by letter or a notice through PAYE Online.

Unpaid PAYE also matters if the business fails. HMRC treats PAYE Income Tax and Construction Industry Scheme deductions as secondary preferential debts, which means they are paid ahead of floating charge holders such as banks in an insolvency. That is why lenders and directors take a PAYE arrears position seriously. Read our guide to HMRC Time to Pay for how an arrangement works.

PAYE is a fixed monthly outflow, and it falls due whether or not your customers have paid you. A business that is waiting on late invoices can find the 22nd arriving before the cash does.

Wages, PAYE and employer’s National Insurance belong in a cash flow forecast from the day you hire. If payroll is outrunning receipts, the gap is a working capital problem, and options such as invoice finance work against money customers already owe you. Borrowing to meet a tax bill costs interest and fees, and it should not be a substitute for fixing the cause.

Capzy is a credit broker, not a lender, and is paid by the lender. We do not handle payroll, PAYE registration or tax filings, so those stay with HMRC, your payroll provider or your accountant.

If a payroll cycle is stretching your cash flow, you can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria.